Governing the Medical Profession: Obamacare and New Governance

Obamacare purports to improve medical quality through dynamic processes that involve government-supported private actors, quality benchmarks, and participation by practitioners and patients. The first in a two-part series.

While Obamacare has inspired much debate about provisions such as the individual mandate, Medicaid commandeering, Medicare cuts, and the “preventive services” contraception mandate, one of its most ambitious parts—integral and multi-tiered systems of medical-quality control—has passed by largely unnoticed.

In order to achieve these quality-control goals, the Affordable Care Act (ACA) employs an approach to regulation that can be properly described as “governance” or “new governance,” which takes its cues from the European Union and favors collaborative, dynamic, decentralized approaches to regulation in lieu of the classic centralized command-and-control methods. The ACA employs principles of “new governance” to enhance “medical quality” and further the regulatory ends of medical-systems analysis, comparative-effectiveness research, and enhance patient participation in health-care delivery.

In many respects, this kind of decentralized and collaborative approach to regulation is necessary if the federal government seeks to regulate medical quality. As it stands, there is no federal agency with a clear statutory mandate to regulate the medical profession (which is what medical-quality regulation would necessarily entail) through traditional command-and-control bureaucratic oversight. Such oversight is traditionally the province of the several states and various ostensibly private medical organizations. Thus, whatever regulatory authority the federal government has over the practice of medicine, it derives indirectly from its very generous health-care spending. Governance is a natural fit for such a naturally decentralized regulatory structure.

The problem is that, while governance gives a certain priority of place to subsidiarity, the governance components of the ACA will merely use decentralized and dynamic means to establish a centralized and static vision of the naturally variegated concept of medical “quality.” In order for governance to work, there must be baseline agreement on the goals of the governance regime, which is impossible in the context of an inherently subjective goal such as medical quality.

These static conceptions of medical quality will undermine the proper autonomy consistently afforded to the medical profession and conflict with the traditional good of clinical experience. Centralized and uniform definitions of medical quality will probably also provide new swords for plaintiffs’ lawyers as well as new shields for defendant physicians, in the former case driving up costs and in the latter replacing clinical judgment with new forms of defensive medicine.

In today’s essay, I explain how ACA uses a governance model to reform the practice of medicine in these areas. A component of the ACA that has so far been under-explored, governance eschews top-down regulation in favor of governance-preferred systems of public-private partnership, benchmarking, and stakeholder participation. In tomorrow’s essay, I will argue that these methods will necessarily yield results inconsistent with the principles of governance and with the practice of medicine, and are thus contrary to the stated goals of health-care reform.

New Governance

The field of “new governance” is indeed new; it has only emerged recently in legal literature and is still developing. Its crowning achievement was the European Union’s Open Method of Consultation. In the United States, many scholars have promoted it in different fields, such as labor and employment law, welfare reform, environmental law, and forestry.

Generally speaking, new governance is a method of regulation that relies on benchmarking, transparency, and democratic ideals. It also favors what is called “dynamic experimentalism” and a subsidiarity-like commitment to decision-making authority being vested as closely as possible to affected parties.

In many ways new governance developed as a response to Bill Clinton’s famous 1996 assertion that “the era of big government is over” by trying to create a third way between “neoliberalism” and the twin evils of the New Deal regulatory model: agency capture and inefficient overregulation. Scholars have catalogued the goals of governance as including participation, integration, decentralization, deliberation, flexibility, experimentation, participation, competition, subsidiarity, benchmarking, and error detection, among many others.

Such a catalogue, of course, says very little in a lot of words—does anyone actually favor rigidity and error continuation?—but it does point to an underlying principle: parties have to agree on some level about the interest that dynamic regulation serves. Otherwise, how can you tell what is an error? What is an appropriate benchmark? How are the regulatory experiments validated? When parties cannot agree on the desired ends of regulation, the sort of win-win interaction that is the goal of dynamic governance regulation might not be possible.

In situations that involve irreconcilable factions, no amount of collaboration and stakeholder participation will yield a win-win outcome. In such cases, background principles of coercion, blanket rules, and adversarial litigation will probably exist—even in a purported new governance regime.

Governance and the ACA

It is often overlooked that recent health-care reform sought not just to increase access to health care and reduce its cost, but also to improve its “quality.” The ACA contains many regulatory innovations that aim to assure a higher quality of medicine in this country. Interestingly, the quality-control and assurance provisions in the ACA conform closely to the structural posture of governance as opposed to “pure” top-down regulation. Indeed, these aspects of the ACA are replete with public-private collaboration, benchmarking, experimentation, and stakeholder participation initiatives.

The ACA seeks to increase medical care’s quality by enacting public-private partnerships. Various quality-reform provisions of ACA involve either continuing existing public-private partnerships or starting new ones. These partnerships involve traditional government-private funding systems (i.e., grant-making to private parties) and the formation of new private enterprises via public law. These efforts are funded to the tune of $20 million between 2010 and 2014.

The ACA also establishes the Patient-Centered Outcomes Research Institute. This institute is defined as a “nonprofit corporation” and “neither an agency nor establishment of the United States Government” designed to “assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which [illnesses are treated and prevented].”

The Patient-Centered Outcomes Research Institute also conforms to the governance norm of benchmarking, since quality benchmarking is one of the institute’s basic goals. This is supposed to occur under the broader framework of establishing “comparative clinical effectiveness research,” which is described by the ACA as “research evaluating and comparing health outcomes and the clinical effectiveness, risks, and benefits of 2 or more medical treatments, [or] services.” The ACA appropriates $1.1 billion to fund comparative clinical effectiveness research.

Benchmarking is prominent elsewhere in the ACA, such as when it establishes “Quality Measures” and instructs the Secretary of Health and Human Services (HHS) as well as the Director of the Agency for Healthcare Research and Quality and the Administrator of the Centers for Medicare and Medicaid Services to “identify, not less often than triennially, gaps where no quality measures exist and existing quality measures that need improvement, updating, or expansion, consistent with the national strategy . . . to the extent available, for use in Federal health programs.” Or when it amends the Medicare Improvements for Patients and Providers Act of 2008 to add new “clinical practice guidelines.” As of now it is somewhat unclear how these various benchmarking initiatives will be operationalized, but they are within the realm of the governance model.

Another clear tie to governance in the ACA is the fact that stakeholder involvement is a typical method for implementing new quality benchmarks. Health-care consumers, most notably, are involved in quality-reform implementation through various statutory provisions that require public dissemination of provider quality and best practices. Providers are also involved in the dissemination of best-practice information by which they are to be regulated.

For example, the ACA instructs the existing Center for Quality Improvement and Patient Safety of the Agency for Healthcare Research and Quality to “make the research findings of the Center available to the public through multiple media and appropriate formats to reflect the varying needs of health-care providers and consumers and diverse levels of health literacy.” The ACA also establishes a website by which Medicare patients can compare physicians.

Likewise, the research of patient-centered outcomes is to be collected with an eye toward involving practitioners and patients: “By improving access to research, the office should help clinicians incorporate the latest findings into their practice.” Further, public involvement in the establishment of best practices can be found in the ACA’s quality-measure development. As the law notes, “The Secretary shall make available to the public on an Internet website a report on any gaps identified . . . and the process used to make such identification.”

What Does This Mean?

The result of all of this is a complex regulatory system in which the goal of higher-quality medicine is not advanced through top-down diktats from bureaucrats in Washington. Instead, the ACA seeks to improve medical quality through dynamic processes that involve government-supported private actors, quality benchmarks, and participation by practitioners and patients.

Of course, it is an open question just how decentralized this regulatory regime really is in practice and how much work is still done by command-and-control. For example, the Secretary of HHS retains considerable discretion even in governance projects: she can add any information she deems “appropriate” to the Physicians Compare database, for example.

Furthermore, while these adaptations of governance-based modes of regulation might be preferable to command-and-control regulation in the abstract, as a matter of medical regulation they are normatively problematic and present unforeseen potential legal difficulties that will complicate traditional modes of medical regulation.

Tomorrow I will show how problems inherent in the definitions of medical “quality,” and the status of medicine as a learned profession, render medical care difficult to regulate through the methods of governance.